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Written and copyright © 2011 by Thomas N. Bulkowski. All rights reserved.
I received an email asking, "When should I quit my job and trade full time?"
My answer is this: When you make as much or more money trading than you do at your day job, then consider trading for a living.
You can trade part time using 1) setups that have a conditional order to enter the trade, and to exit -- use a 2) stop loss order or a 3) target order. If you have those
three components, then you don't
need to follow the markets full time. Evaluate the markets before and as they open, and then place your order(s). Near the close, check on how you did. If any setup triggered
and the trade remains opened, close it out regardless of whether or not you show a profit.
Here are additional suggestions. Keep your day job...
- If you don't have those types of mechanical trading setups;
- If you can't follow your setups without deviating;
- If you can't pull the trigger by exiting any setup before the close. A day trade is a day trade. No exceptions;
- If you don't have enough money to live on (cover all expenses, including vacations, and luxuries like food) for months (6 months to a year is a good start but 2 years is better. If you have
to find a job after burning through your trading capital, then it could take a long time before you're employed again). This does not include your trading capital.
- If you intend to use your entire trading capital for day trading. Diversify. Only a portion of your trading capital should be used for day trading (say, 25%). Split the rest into
other types of trading or investing, like swing or position trading and have money in long term plays (buy and hold, bonds, money market funds, and so on).
-- Thomas Bulkowski
Written and copyright © 2011 by Thomas N. Bulkowski. All rights reserved. 'Backward, too, you would speak if laid you had not been in 700 years.' -- Yoda
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